Assignment week 7

arning X + tps://ng.cengage.com/static/nb/ui/evo/index.html?deploymentid=5933142288413647560152243&eISBN=97813379 CENGAGE | MINDTAP 11: Assignment - The Basics of Capital Budgeting Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $800,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because returns in percentage form are easier to understand and compare to required returns. Blue Llama Mining Company's WACC is 8%, and project Sigma has the same risk as the firm's average project. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $350,000 $475,000 $425,000 $500,000 Which of the following is the correct calculation of project Sigma's IRR? 34.38% 38.20% 42.02% O 36.29%

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Subject: accounting

sent value index Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Total present value of net cash flow Amount to be invested Net present value Des Moines Cedar Rapids $192,610 $214,080 (187,000) $5,610 (223,000) $(8,920) a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places. Total present value of net cash flow Amount to be invested Des Moines Cedar Rapids Present value index b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.) , because the net present value index is 1.

Question content area top Part 1 ​(IRR calculation​) Determine the IRR on the following​ projects:   a. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$17,165 after 9 years b. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$46,394 after 15 years c. An initial outlay of ​$13,000 resulting in a single free cash flow of $105,001after 25 years d. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$13,653 after 4 years

Information on four investment proposals is given below:Investment ProposalA B C DInvestment required ........................ $(90,000) $(100,000) $(70,000) $(120,000)Present value of cash inflows ......... 126,000 138,000 105,000 160,000Net present value ............................ $ 36,000 $ 38,000 $ 35,000 $ 40,000Life of the project ............................ 5 years 7 years 6 years 6 yearsRequired:1. Compute the project profitability index for each investment proposal.2. Rank the proposals in terms of preference.

Present value index Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Des Moines Cedar Rapids $277,680 (267,000) $10,680 Total present value of net cash flow Amount to be invested Net present value a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places. Total present value of net cash flow Amount to be invested Present value index $302,100 (318,000) $(15,900) I Des Moines b. Which location does your analysis support? (If both present value indexes are the same, either location will grade as correct.) 1. Cedar Rapids because the net present value index is

Video Excel Online Structured Activity: Capital budgeting criteria A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 + Project A -$300 -$387 Project B -$405 $133 -$193 -$100 $133 $133 $600 $133 $600 $133 $850 -$180 $133 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ 162.48 Project B: $ b. What is each project's IRR? Round your answer to two decimal places. Project A: 18.10 % Project B: %

7. Consider the following table for the cash flows of an investment account: Time mm/dd/yy 01/01/2015 04/01/2015 08/01/2015 12/31/2015 Contribution -300 +2,000 (a) Calculate the TWRR and the DWRR of the fund. (b) Comment on the results. Fund value before contribution 1,000 500 250 2,800

question 20 choose the correct answer from the choices

TB 13-47 (Appendix 13A) The following data pertain to an investment (Appendix 13A) The following data pertain to an investment proposal: Present Investment Required $27,130 Annual Cost Savings $5,000 Projected life the investment 10 years Projected Salvage Value $-0- What would be the internal rate of return? (Ignore income taxes in this problem.) Multiple Choice 5.426%. 13.0%. 54.26%. О 542.6%.

First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows:   BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $686,053   $516,654   $295,458   Annual net cash flows:               Year 1 411,000   288,000   177,000     Year 2 382,000   259,000   122,000     Year 3 349,000   230,000   89,000     Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1.  Assuming that the desired rate of return is 20%, prepare a net present value analysis for each project. Use the…

Q. 1 purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Lori Alleyne, staff analyst at McGloire's, is preparing an analysis of the three projects under consideration by Joyanne McGloire, the company's owner. McGloire Construction is analyzing its capital expenditure proposals for the A в D Project A Project B Project C 1 Projected cash outflow Net initial investment 2 3 $3 000 000 $1 500 000 $4 000 000 4 5 Projected cash inflows Year 1 $1 000 000 1 000 000 1 000 000 1 000 000 $ 400 000 $2 000 000 7 Year 2 900 000 2 000 000 8 Year 3 800 000 200 000 Year 4 100 000 10 11 Required rate of return 10% 10% 10% 1. Because the company's cash is limited, McGloire thinks the payback method should be used to choose between the capital budgeting projects. a. List two benefits and two limitations of using the payback method to choose between projects? b. Calculate the payback period for each of the three project Ignore income taxes. Using the payback…

W Screenshot (126).png Chapter 26 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 2 3 4 1 64°F Internal rate of return method The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $17,946 and annual net cash flows of $6,000 for each of the 5 years of its useful life. 5 6 7 8 9 10 0.943 65°F Windy eBook 0.909 1.736 2.487 3.170 3.791 4.355 0.893 1.690 2.402 3.037 3.605 4.111 3.785 4.868 4.564 4.160 4.968 4.487 4.772 5.019 5.328 5.650 1.833 2.673 3.465 4.212 4.917 5.582 5.335 6.210 6.802 5.759 6.145 7.360 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places. 0.870 1.626 2.283 2.855 ▬ ▬▬ ■ 3.353 0.833 1.528 2.106 Q Search 2 2.589 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the…

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On August 1, 2024, Reliable Software began developing a software program to allow individuals to customize their investment portfolios. Technological feasibility was established on January 31, 2025, and the program was available for release on March 31, 2025. Development costs were incurred as follows: August 1 through December 31, 2024 January 1 through January 31, 2025 February 1 through March 31, 2025 $ 6,300,000 1,200,000 1,600,000 Reliable expects a service life of five years for the software and total revenues of $8,000,000 during that time. During 2025, revenue of $2,000,000 was recognized. Required: 1. Prepare the journal entries to record the development costs in 2024 and 2025. 2. Calculate the required amortization for 2025. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the development costs in 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry…

Net Present Value Method, Present Value Index, and Analysis First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows:   BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $787,317   $584,976   $298,035   Annual net cash flows:               Year 1 391,000   278,000   164,000     Year 2 364,000   250,000   113,000     Year 3 332,000   222,000   82,000     Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1.  Assuming that the desired rate of return is 10%,…

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Required information [The following information applies to the questions displayed below.] The following capital expenditure projects have been proposed for management's consideration at Scott Inc. for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Project Year(s) B D $ (25,000) $(50,000) 16,000 16,000 16,000 16,000 16,000 $ (50,000) 5,000 10,000 15,000 20,000 25,000 Initial investment $(25,000) 5,000 5,000 5,000 5,000 5,000 5,000 $ 1,081 $(100,000) 30,000 30,000 Amount of net cash return 1 2 3. 10,000 10,000 10,000 6,000 15,000 15,000 15,000 15,000 2,942 4 5 Per year 6-10 NPV (14% discount rate) 2$ $ Present value ratio 1.04 Required: a. Calculate the net present value of projects indicated by a minus sign.) and D, using as the cost of capital for Scott Inc. (Negative amounts should be Project Net Present Value B D

Internal rate of return method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $174,160 and annual net cash flows of $40,000 for each of the six years of its useful life. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Determine the internal rate of return for the proposal. fill in the blank 2 %